Richard Desmond's Northern & Shell is to report profits of more than £40m for 2011, thanks to being able to consolidate the first full year of financial performance for Channel 5.

Northern & Shell, which will file official figures with Companies House later this week, said revenues have grown by almost 40% year on year from £496m to £688m.

The company said profits for the year will be £40m. It was unclear at the time of publication whether this refers to pre- or post-tax profits.

The figure compares to a post-tax profit of £52.5m reported in 2010, which was fuelled by a £22.2m tax credit, and £30.3m on a pre-tax basis.

Northern & Shell's results were driven by a solid performance from Channel 5, which saw a 23% surge in revenue to £353m, as revealed by MediaGuardian.co.uk, thanks to factors including the arrival of Big Brother and the return of a major media buying contract with Aegis, which had boycotted the channel for most of 2010.

Aegis buys advertising space for brands including Asda, British Gas and Coca-Cola, which did not appear on Channel 5 for the best part of nine months in 2010.

The company said Channel 5 moved from an operating loss of £48m in 2010 to an operating profit of £26m last year.

Desmond acquired the ailing channel from German broadcaster RTL in July 2010 for about £100m.

The profits haul will anger staff at Express Newspapers, publisher of the Daily Star, Daily Star Sunday, Daily Express and Sunday Express, which in March announced plans to cut almost 70 posts to save about £5m a year.

N&S admitted it had spent £28.5m on startup costs for The Health Lottery, the under performance of which was cited by senior management as a reason that Express Newspapers needed to make cuts.

The Health Lottery business reported a turnover of £10m and a pre-tax loss of £28.5m in the year to the end of December.

In April, Martin Hall, the chief executive of the Health Lottery, stepped down as it emerged that it is likely to make just half the £50m a year in revenues for good causes that Desmond promised at launch last October.

N&S says that it has a healthy cash balance of £61.3m.

"Despite the difficult macro economic climate, the group has achieved significant growth over the last two years, both in its core media activities and out into other business areas," said Robert Sanderson, finance director at N&S. "We remain intent on continuing to explore further opportunities."

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